Investing.com - Gold futures remained higher on Thursday, as the euro pushed higher against the U.S. dollar as optimism grew that Greece was moving closer to securing a debt swap deal with its private creditors ahead of a deadline later in the day, easing fears over a messy sovereign debt default.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,692.25 a troy ounce during U.S. morning trade, climbing 0.5%.
It earlier rose by as much as 1.2% to trade at a two-day high of USD1,704.55 a troy ounce.
Gold futures were likely to find support at USD1,663.75 a troy ounce, Tuesday’s low and resistance at USD1,709.75, Tuesday’s high.
Market sentiment improved as prospects for a successful Greek deal rose after a group of major banks and funds said they would take part in the swap.
So far, bondholders representing around 60% of Greece’s outstanding private-sector debt have indicated they will participate in the swap, according to Bloomberg.
Market talk that the number was closer to 73% saw prices spike higher to the session high, before retracing gains.
A senior Greek finance ministry official told Reuters the government was hopeful that well over 75% of eligible bonds would be submitted, easily clearing the original minimum threshold it had set for the deal to proceed.
The swap is vital for Greece to cut its debt and secure a bailout of EUR130 billion. Without the aid package, Greece could potentially default on its debt later this month.
The euro pushed higher against the U.S. dollar on the news, trading at a four-day high, while the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.44% to trade at 79.38.
Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.
Also Thursday, the European Central Bank left its benchmark interest rate unchanged at 1% for the third consecutive month in March.
Speaking at the bank’s post policy meeting press conference ECB President Mario Draghi said he expected the euro zone’s economy to “gradually” recover in the course of the year.
Draghi added that inflation will stay above 2% in 2012 and added that the region's outlook was subject to downside risk related to increases in energy prices.
Meanwhile, prices continued to draw support from a report in the Wall Street Journal saying that the Federal Reserve was considering a new type of mortgage and Treasury bond-buying program, also known as quantitative easing, to help stimulate the U.S. economy.
Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates.
BNP Paribas said in a report earlier that QE 2.5 or QE 3-lite "in the next two or three months is possible."
Gold can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies.
The precious metal came under heavy selling pressure in recent weeks after Fed Chairman Ben Bernanke disappointed financial markets when he failed to signal another imminent round of monetary easing.
Elsewhere on the Comex, silver for May delivery shed 0.4% to trade at USD33.44 a troy ounce, while copper for May delivery trimmed gains, up 0.25% to trade at USD3.776 a pound.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,692.25 a troy ounce during U.S. morning trade, climbing 0.5%.
It earlier rose by as much as 1.2% to trade at a two-day high of USD1,704.55 a troy ounce.
Gold futures were likely to find support at USD1,663.75 a troy ounce, Tuesday’s low and resistance at USD1,709.75, Tuesday’s high.
Market sentiment improved as prospects for a successful Greek deal rose after a group of major banks and funds said they would take part in the swap.
So far, bondholders representing around 60% of Greece’s outstanding private-sector debt have indicated they will participate in the swap, according to Bloomberg.
Market talk that the number was closer to 73% saw prices spike higher to the session high, before retracing gains.
A senior Greek finance ministry official told Reuters the government was hopeful that well over 75% of eligible bonds would be submitted, easily clearing the original minimum threshold it had set for the deal to proceed.
The swap is vital for Greece to cut its debt and secure a bailout of EUR130 billion. Without the aid package, Greece could potentially default on its debt later this month.
The euro pushed higher against the U.S. dollar on the news, trading at a four-day high, while the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.44% to trade at 79.38.
Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.
Also Thursday, the European Central Bank left its benchmark interest rate unchanged at 1% for the third consecutive month in March.
Speaking at the bank’s post policy meeting press conference ECB President Mario Draghi said he expected the euro zone’s economy to “gradually” recover in the course of the year.
Draghi added that inflation will stay above 2% in 2012 and added that the region's outlook was subject to downside risk related to increases in energy prices.
Meanwhile, prices continued to draw support from a report in the Wall Street Journal saying that the Federal Reserve was considering a new type of mortgage and Treasury bond-buying program, also known as quantitative easing, to help stimulate the U.S. economy.
Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates.
BNP Paribas said in a report earlier that QE 2.5 or QE 3-lite "in the next two or three months is possible."
Gold can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies.
The precious metal came under heavy selling pressure in recent weeks after Fed Chairman Ben Bernanke disappointed financial markets when he failed to signal another imminent round of monetary easing.
Elsewhere on the Comex, silver for May delivery shed 0.4% to trade at USD33.44 a troy ounce, while copper for May delivery trimmed gains, up 0.25% to trade at USD3.776 a pound.